A proposed merger of a firm of accountants, which was instructed to provide expert evidence in an action against auditors, with another firm that had been retained by the auditors gave rise to a conflict of interest and breach of the retainer.

The High Court in Northern Ireland refused to restrain solicitors from acting where they had acted for the opposing party 20 years previously. The decision also addresses the delay in making the application, which suggested that the underlying reason for the application was tactical.

These Model Rules of Professional Conduct serve as models for the ethics rules of most states in the United States. However the rules of individual states may vary significantly. See Model Rules 1.7 to 1.11.

US decision in a case arising from enforcement of an arbitration award held under the London Court of International Arbitration (LCIA) Rules, holding that an English barrister appointed as arbitrator was not subject to a conflict where another member of the barrister’s chambers had represented interests adverse to the Government of Belize, because English barristers operate as independent practitioners.

EWHC 811 (QB)
A solicitor had no conflict of interest in negotiating a contingency fee agreement, and, on the facts, no obligation to tell the claimant, an experienced businessman, to seek separate advice.

Millett LJ described a fiduciary as "..someone who has undertaken to act for or on behalf of another in a particular matter in circumstances which give rise to a relationship of trust and confidence. The distinguishing obligation of a fiduciary is the obligation of loyalty. The principal is entitled to the single-minded loyalty of his fiduciary. This core liability has several facets. A fiduciary must act in good faith; he must not make a profit out of his trust; he must not place himself in a position where his duty and his interest may conflict; he must not act for his own benefit or for the benefit of a third person without the informed consent of his principal. This is not intended to be an exhaustive list, but it is sufficient to indicate the nature of fiduciary obligations."

Proposed Formal Opinion Interim No. 12-0005 (Seeking Advice About Current Clients) – considers what ethical obligations arise when lawyers in a law firm consult with external or in-house counsel on an ethical issue or a possible error by the law firm.

Australian case considering ‘Getting to know you’ factors, referred to in American cases as ‘playbook conflicts’, holding that the information in question must be identified with precision and not merely in global terms in order to constitute confidential information.

American case where an attorney was a partner in two law firms in New York and Buffalo respectively. The firms (but not the partner in question) acted for two clients who were in dispute on competition matters. The court disqualified the New York firm from acting. The court found that ‘they were confident that he would make every effort to disassociate himself from both lawsuits and would not divulge any information that came to him concerning either. However, they could not impart this same confidence to the public by court order.’

Advance waiver, subsidiaries and affiliates. Motions to disqualify require the court to balance "the sacrosanct privacy of the attorney-client relationship (and the professional integrity implicated by that relationship) and the prerogative of a party to proceed with counsel of its choice."

Scottish case: Firm A acted for a policyholder in an insurance dispute, then ceased acting. Firm B acquired Firm A, employing the solicitor who had acted for the policyholder as a part-time consultant, and other members of the firm acted for the insurer in the same dispute. There was no formal information barrier in place, but Firm B submitted that there was no risk of casual or accidental disclosure. The Inner House of the Court of Session declined to order Firm B to cease acting. However the court expressed the view that the case may prompt the professional bodies to reflect on their codes of conduct.

A claims control clause in an insurance policy entitled the insurer’s liquidator to terminate a solicitor’s retainer and appoint other solicitors to act for the insurer and the insured. Groom v. Crocker [1939] 1 KB 194 and Reg. 6 of the Insurance Companies (Legal Expenses Insurance) Regulations 1990 considered.

US case – A ‘general and open-ended waiver’ would ordinarily be ineffective but if the client is ‘an experienced user of legal services’ and is ‘reasonably informed regarding the risk that a conflict may arise,’ the consent is more likely to be effective. Galderma was a sophisticated client and the waiver was held to apply.

Solicitors from acting against a former client in commercial proceedings against their owners - real risk of misuse of confidential information which the solicitors had acquired when previously acting for the companies.

Lateral hire – Court of Appeal refused to restrain solicitors from acting as the risk of disclosure was more theoretical than real; the information related to transactional matters conducted some years before. One had to stand back from the adversarial process and assess how likely the risk of disclosure really is.

The Court of Appeal refused to set aside the appointment of an arbitrator who failed to disclose later, related appointments, holding that he should have disclosed them but a fair-minded and informed observer would not conclude that there was a real possibility that the arbitrator was biased.

Accountants’ professional liability claim involving acting where there was a conflict of interest and the accountants failed to obtain informed consent. The judge found that there were also breaches of the duty of confidentiality. An information barrier (referred to in the judgment as ‘Chinese Walls’) was found to be ineffective. A solicitor acts in a different professional, regulatory and ethical context from an accountant. An accountant who was subject to a conflict of interest had no duty to disclose one client's confidential information to the other client, even if the accountant should not have accepted the second engagement. (See para. 494.)

Solicitors who acted for two clients in a property transaction, despite a conflict of interests, were held liable to the claimant. Their duty to the claimant was not modified by the fact they owed duties to the other client. It would be a breach of duty to a client to provide information relating to that client (in this case, a conviction) to the claimant even though it was in the public domain.

When seeking a waiver, an attorney’s duty to disclose any representation adverse to the interests of its client could not be fulfilled by mentioning "in passing" participation in a brief contrary to the interests of the client without stating the details of why the interests are contrary. The failure fully to disclose the client’s exposure, as well as the extent of its participation in this action, fell short of the "undivided loyalty" it owed to its client. The details are essential to informed consent so that the client can weigh and measure the nature of the contrary interests and give informed consent based upon knowledge of material facts.

There was no conflict of interest where a barrister acted on a wife's behalf in ancillary relief proceedings, having previously acted the husband in ancillary relief proceedings relating to his previous divorce. The husband was the author of his own misfortune in consenting to the barrister acting for the wife before the District Judge.

[2017] EWHC 1189 (Ch)
Executorship: A person who is asserting a claim which is adverse to an estate should not take out a grant of representation, as a personal representative is in a fiduciary position. If a law firm knows of the claim, it should advise the person.

Failed application to restrain Investment bank from advising on a possible hostile take-over on the basis that it allegedly held confidential information relating to the claimant. ‘[By] identifying the information at a public hearing of this application in its evidence and in the submissions of its Counsel, M has brought these pieces of information into the public arena: they are no longer private, but common knowledge. They can no long (if they ever could) found any claim to any relief.’

Order restraining solicitors from acting where there was a real risk of a conflict of interests and potential breach of confidential information arising from prior retainer, which could not be protected by information barriers. The conflict rules were not limited to ‘same transaction' cases. There simply had to be a reasonable or sufficient degree of relationship between the two matters. Solicitors could not wait to see if the takeover bid went hostile before deciding whether to act.

The Competition Appeals Tribunal held that there was no potential conflict of interests arising from the costs funding arrangement in an application for a collective proceedings order, in an action brought on behalf of a class of 46.2 million people, under sect 47B of the Competition Act 1998.

Millett LJ described a fiduciary as "..someone who has undertaken to act for or on behalf of another in a particular matter in circumstances which give rise to a relationship of trust and confidence. The distinguishing obligation of a fiduciary is the obligation of loyalty. The principal is entitled to the single-minded loyalty of his fiduciary. This core liability has several facets. A fiduciary must act in good faith; he must not make a profit out of his trust; he must not place himself in a position where his duty and his interest may conflict; he must not act for his own benefit or for the benefit of a third person without the informed consent of his principal. This is not intended to be an exhaustive list, but it is sufficient to indicate the nature of fiduciary obligations."

A buyer’s solicitor provided limited services to the seller but there was no breach of fiduciary duty nor of the double employment rule and the seller was taken to have given his informed consent. Clark Boyce v Mouat [1994] AC 428 applied.

Confidential, privileged information could not be provided to a law firm’s insurers without the client’s consent. ‘[The] privilege is that of his client and cannot be broken or waived without the client's consent. It may be that, if the client will not waive his privilege to enable proper disclosure to be made, the consequence of the resulting conflict of interest will be that the insurance is vitiated or the notification inadequate but that is the problem of the solicitor not the client.’

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Rakusen v. Ellis, Munday and Clarke [1912] 1 Ch. 831

There is no absolute rule of law in England that a solicitor may not act in litigation against a former client. A solicitor may be restrained from acting if such a restriction is necessary to avoid a significant risk of the disclosure or misuse of confidential information belonging to the former client. An injunction was refused even though this was only a two partner firm.

The Privy Council, citing Groom v Crocker [1939] 1 KB 194, held that a clause in an insurance policy did not provide carte blanche to insurers to conduct proceedings in their own interests, without regard to reality or to their insured’s account of events or to the fact that here the claim was likely severely to affect their insured.

Article by Janine Griffiths-Baker and Nancy J. Moore on the problems of implementing conflicts policies in global law firms caused by differences between conflicts rules. The article compares the American Bar Association Model Rules of Professional Conduct and the SRA Code of Conduct 2011.

American case in which it was held that a law firm’s knowledge of a former client’s “methods of negotiating settlements,” “litigation strategies,” and litigation “playbook” does not warrant disqualification, and does not preclude the firm from undertaking factually distinct representations adverse to them.

The solicitor’s duty of confidence to a liquidator was displaced where the liquidator had co-operated with a creditor to a high degree and the solicitor could therefore act for the creditor in subsequent proceedings against the liquidator. Consideration of joint retainer issues.

As part of a wider review of regulation, the SRA have proposed to retain the rule on conflicts of interests broadly in the current form provided by Chapter 3 of the SRA Code of Conduct 2011. See paragraphs 91-98 of ‘Our response to consultation: Looking to the Future - flexibility and public protection’ and Rule 6 in each of ‘Annex 2 - Code of Conduct for Solicitors’ and ‘Annex 3 - Code of Conduct for firms’.

Independence, representation and risk report October 2015 – independent research by Claire Coe Smith and Dr Steven Vaughan. The report includes a review of the impact of outside counsel guidelines on law firm independence.

Proceedings in the Solicitors Disciplinary Tribunal arising out of Georgian American Alloys Inc & others v White & Case LLP [2014] EWCH 94. Under an Agreed Outcome, the SDT imposed fines of £50,000 and costs of £12,500 on the partner and £250,000 and costs of £25,000 on the firm.

Proceedings in the Solicitors Disciplinary Tribunal in which it was held that there was a ‘clear risk of conflict of interest’ where the solicitor was in a personal, intimate relationship with a client for whom he had acted in matrimonial proceedings. The Tribunal noted that the Respondent had sought advice from the SRA’s Ethics Advice Line on two occasions as to his position, and that the response was at best opaque.

SRA v Harvie

Case No. 11257-2014

Solicitor fined £305,000 by the Solicitors Disciplinary Tribunal for an own interest conflict.

It was not sufficient for a solicitor receiving loans from clients to advise those clients to obtain independent legal advice: they must in fact receive such advice, and if they refused to obtain it, the solicitor must refuse to accept the loans.

Disciplinary action against a matrimonial solicitor who disclosed to his client the address of the property being purchased by his client's ex-wife for whom the firm's conveyancing department was acting. Under an agreed outcome, the solicitor was fined £15,000 and the firm £20,000, with costs of £7,000.

Solicitor acted for the liquidator of a company in litigation funded by a creditor. Co-operation resulted in disclosure of confidential information between the two displacing the ordinary duty of confidence owed to the liquidator by the solicitor. The solicitor was permitted to continue acting for the creditor in subsequent proceedings against the liquidator.

Claimant failed in her claim against solicitors for alleged conflict of interest/failure to seek separate advice on a declaration of trust in cohabitation case. Limited retainer not extending to the merits of the previously agreed terms, though they were advantageous to the claimant in any event on the facts.
Decision addresses the conflicts provisions in the Law Society's Guide to Professsional Conduct of Solicitors, now replaced by the SRA Code of Conduct 2011.

US case – Court refused to disqualify Heller Ehrman. The waiver contained full disclosure of the firm acting for Visa and that it would only act for First Data on condition it could continue to act for Visa in any future disputes. First Data was a ‘sophisticated user of legal services’ and capable of ‘understanding the full extent of what it waived’.

Decision of the High Court of Singapore holding that a court may take into account in applying [the substantially related matter] test, for example, the solicitor’s knowledge of the disposition of the former client which is neither confidential information nor information which is directly relevant to the subject-matter of the later matter’ and may therefore take into account the ‘larger public interest … and that is the solicitor-client relationship of trust and public confidence in the integrity of the legal profession’.

International arbitration case involving a challenge for apparent bias based on alleged conflict of interest. The arbitrator’s firm (but not the arbitrator) regularly advises an affiliate of the Defendant (but not the Defendant), a fact of which the arbitrator was unaware as the firm’s conflict check systems did not alert him to this, due to the way in which the acquisition of the affiliate by a client of the firm was named within the firm. The court declined to apply the International Bar Association Guidelines on Conflicts of Interest in International Arbitration 2014 at para.1.4 which identified this as a non-waivable conflict of interest.

US case - Squire Patten Boggs disqualified following merger. The Court found that the advance waiver was ineffective as it ‘lacks specifity’, ‘purports to waive conflicts in any matter not substantially related indefinitely’, and ‘does not identify a potentially adverse client, the types of potential conflicts, or the nature of the representative matters.’

The court declined to prevent a defendant insurer from relying upon a fire expert who had carried out an initial investigation on behalf of the insurers and also provided assistance to the claimant insured in connection with a potential claim against another party. The expert had not received information confidential to the claimant, and in any event, as an expert witness, he had an overriding duty to the court.

Husband’s successful application for an order restraining his wife’s solicitors from acting when a partner had previously acted for him while at another firm. Application of principles in Prince Jefri Bolkiah v. KPMG (A Firm) [1999] 2 AC 222.